Setting Profitable Prices. A Step–by–Step Guide to Pricing Strategy––Without Hiring a Consultant + Website

  • ID: 2329314
  • Book
  • 186 Pages
  • John Wiley and Sons Ltd
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Praise for Setting Profitable Prices

"Setting prices without this book is like burning your money! Don′t worry if your time is limited, Dr. Jensen doesn′t bog you down with any more steps than absolutely needed to set more profitable prices today!"
P. Nicole Borner, CEO and founder, MetaMorph, Inc.

"Marlene Jensen has boiled down decades of practical knowledge into a few short steps that can add profits to anyone′s pricing strategy. I like that she′s read thousands of pricing research studies, and conducted plenty herself. But I like even more that she knows how to condense it to what′s important for the busy executive. Do yourself and your company a favor and start profiting from this book!"
Roland A. DeSilva, Chairman and Managing Partner, desilva+phillips

"Managers can be so focused on product launches or customer retention that they fail to consider the impact of pricing on the ultimate success of their companies."
John Suhler, Founding Partner and President, Veronis Suhler Stevenson

"In Setting Profitable Prices, Dr. Marlene Jensen has a highly readable step–by–step guide, with easy–to–follow worksheets. This book belongs on every business owner′s bookshelf and is especially valuable to a small business owner who does not have thousands of dollars to spend on a pricing consultant. I′ll recommend it without reservation."
Seija Goldstein, President, Seija Goldstein Associates, Inc.; consultant to regional media companies on start–ups, profit improvement, and mergers and acquisitions

"As a commercial lender for over twenty–five years, I have observed that many small business owners do not have an actual pricing strategy. This book will provide entrepreneurs with valuable insight into competitively pricing their products and services."
Wade A. Keiffer, Vice President/Business Development Officer, First Citizens Community Bank

"Setting Profitable Prices by Marlene Jensen is a very well–written book, easy to read, and contains demonstrative examples of how optimal pricing decisions are made by examining the consequences of various pricing approaches on financial and brand–specific outcomes. Grounded in years of research, the book provides a scientific and practical foundation for how pricing should be done, and is a highly useful resource for anyone involved in making pricing decisions."
Hooman Estelami, Professor of Marketing, Graduate School of Business, Fordham University

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Preface xv

Author Credentials xv

If You Can Afford a Pricing Consultant . . . xvi

Don t Have the Cash to Invest? xvii

How Big of a Rush Are You In? xvii

Chapter Summaries xviii

Acknowledgments xxi

PART 1 HOW TO SET PRICES FOR MAXIMUM PROFITS 1

Chapter 1 Why Pricing Is the Key to Your Success 3

Raise Prices or Sell More Products? 3

Big–Company Case History 5

Tiny–Company Case History 5

Chapter 2 Why Most Companies Stink at Pricing (and How You Can Do Better!) 7

The Myth of Creating Demand Curves 8

How Your Competitors Are Setting Prices 9

Cost–Plus Pricing 9

Match–Your–Competitors Pricing 11

PART 2 HOW THE MARKET WILL VALUE YOUR NEW PRODUCT 13

Chapter 3 Analyzing Your Competitors Prices 15

You Do So Have Competitors! 15

How to Pick Your Competitors 16

Direct vs. Indirect Competitors 16

How Consumers Evaluate Prices 18

How to Get Profitable Ideas from Your Competitors 19

Chapter 4 Environmental Factors That Can Affect Your Pricing 21

Environmental Factors Overview 21

The Economy 21

Competitors 24

Government Regulation and Legal 24

Social Trends 25

Technological Change 26

Chapter 5 Pick the Positioning of Your New Product 29

There Are Only 3 Choices! 29

The Psychology of Price Positioning 30

Penetration Price Positioning 31

Skimming (or Premium) Price Positioning 35

Competitive Price Positioning 38

Learning More about Competitive Pricing 40

Chapter 6 Analyzing Your Buyer Benefits/Drawbacks Relative to Your Competitors 43

Uncovering What Buyers Really Value/Hate about Products in Your Marketplace 44

Learn More about Calculating Buyer Valuation of Different Features 44

Chapter 7 Picking a Ballpark for Your Best Price 47

You Will Not Be Stuck with Your Decision! 48

Can t Make a Profit at that Price Range? 49

Not Sure about Your Results? 49

Learn More about Buyers Reactions to Price Ranges 50

PART 3 YOUR COST ANALYSIS 53

Chapter 8 Evaluating Your Costs 55

The Ideas Behind Target Costing and Target Engineering 55

Types of Costs 56

The Hardest Part of Calculating Costs 57

Reasons for Launching a Product that Doesn t Cover Overhead 58

PART 4 FINE–TUNING YOUR PRICE 59

Chapter 9 Is Your Profit Potential Acceptable? 61

If You re Happy with Your Potential Profits 61

If You re Not Happy with Your Potential Profits 62

Next Step 66

Chapter 10 Psychological Adjustments to Your Price 67

Understanding Barriers in Prices 68

Staying below Barriers 68

Increasing Prices up to Barriers 69

Numbers that Say Discount to Buyers 70

Test Your Knowledge! 71

Visually Appealing Prices 72

Selling to Businesses 73

Learn More about Thresholds 74

Learn More about the Effect of Numbers 75

PART 5 TESTING YOUR PRICES 77

Chapter 11 Testing Prices 79

The Psychology of You in Setting Prices 79

Can You Test? 81

The Difference between Testing and Research 81

Chapter 12 Using Google to Test Prices for Free (or Almost Free) 83

Two Methods for Almost–Free Testing!! 83

Using Google Optimizer to Test Multiple Things 87

PART 6 PRICING IN SPECIAL SITUATIONS 91

Chapter 13 Pricing Services 93

Imagine No Chapter 13! 93

The Complications of Setting Prices for Services 94

The Myth of Pricing Based on What You Want to Earn 94

Pricing by the Hours versus the Job 94

Finding What Service Competitors Charge 96

Picking Your Price Positioning 97

What Your Price Says about Your Firm 97

How to Charge Higher Prices to Those Willing to Pay More 98

Chapter 14 Pricing New Products/Services, Part 1: When Your Brand Is Unknown 101

The Problems in Pricing Something New 101

Price Equals Quality Buyer Perception 102

Does Quality Equal Likelihood–to–Buy? 102

Understanding Bargain Hunters 103

Price Preferences by Product Type 103

Detailed Research on Buyer Price Position Preferences 104

Additional Research on Preferred Prices 107

Learn More about Risk and Pricing 110

Chapter 15 Pricing New Products/Services, Part 2: Competing with Established Brands 113

When Your Competitors Are Established Brands 113

Risk Avoidance 116

Price Premiums for Known Brands 117

Discounting Differences 120

What Causes Customers to Switch to a New Brand? 124

What Happens after Buyers Switch? 126

Shocking Findings on Brand Names 127

So What Does it All Mean for Pricing a New Product/Service? 127

Chapter 16 Pricing with Discounts 129

Discounts: A Double–Edged Sword 129

When Discounts Worry Consumers 130

Determining Best Discount Levels 136

Discounts Effect on Quality Ratings and Purchase 137

Concluding Thoughts on Pricing, and Especially on Testing Prices 139

Appendix of Worksheets 141

Bibliography 157

About the Author 171

About the Companion Web Site 173

Index 175

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